What’s Holding Us Back?
In 2018 we are free to live however we want. In this day and age with a little creativity, effort, and self-discipline we can truly live the fulfilling lives we deserve. However, the only thing holding us back most of the time is our financial situations. Or more specifically, what’s really holding us back is our limiting beliefs about our financial situations; which happen to be derived from the myths that we’ve been told about money.
These myths only exist because we believe in them and allow them to exist. So it’s important to understand here, that the consequences of allowing them to subsist are actually really detrimental to us financially.
“Buying” into these myths prevents us from saving and budgeting effectively and also keeps us in debt. But just because we have fallen for these misconceptions in the past doesn’t mean we have to continue to keep falling for them in the future.
Though there are many myths out there, a good way to start resetting our mindsets is by getting these 5 debunked myths about money out of our heads.
Tracking our spending is the same as budgeting our money
On the contrary, these two are not the same. While budgeting does, of course, involve tracking our spending…simply just tracking our spending won’t lead us to financial freedom. Tracking our spending is about just passively watching our money as it exits our bank accounts.
Whereas budgeting is about taking action and planning for the future. Budgeting is about having goals and making the most of our money, not just keeping a watchful eye on where it all goes.
However, tracking our spending is a great disciplined first step towards creating our budget.
A credit card can be a replacement for an emergency fund
No doubt, that a credit card can be a useful tool but the last thing we’d need if we took an unexpected hit to our budget is winding up with a huge interest bill. It’s better to start building a savings buffer by putting small amounts away so that we can use our credit cards wisely.
Charging large amounts on our credit cards in emergencies should be a last resort for a worst-case scenario, not an initial plan of attack.
Having credit card balances helps us build up our credit scores
This is a pretty widespread myth. Carrying a balance from month to month will give us a pretty lengthy credit history but not a good one. When it comes to managing personal credit it’s better to just pay our bills in full and pay off our purchases every month.
All debt is bad and terrifying
Part of becoming financially savvy is understanding that not all debt is bad debt. There is also good debt. Good debt is getting a mortgage for a property you want to turn into a rental property.
Bad debt is credit cards and any other debt that was borrowed for consumption purchases with no plan of financial gain.
It’s no wonder that the “Great Recession” has helped us develop an aversion to debt but it’s important to note that certain types of debt can really help us reach our financial goals. Getting into debt isn’t bad if it’s able to provide a clear financial gain.
Only rich people can afford to invest
We all fall victim to this and erroneously believe that the stock market is reserved for the ridiculously rich who could just shrug and laugh if they made a bad call. This, actually, couldn’t be further from the truth and we shouldn’t let this prevent us from getting started.
Investing can be a lot easier than anticipated and is a great way for us to diversify our income streams. It makes sense to have our money work harder for us since it won’t do us a whole lot of good sitting in a savings account with interest rates the way they are.
There is also peer-to-peer lending if you don’t have the time or the inclination to get involved in the stock market.
By debunking these 5 money myths we can now take control of our financial situations and start taking the necessary steps towards becoming financially free.